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Demystifying Prop F

Demystifying Prop F

Demystifying Prop F


Demystifying Prop F

At this late point in the election cycle you’ve probably heard most of the rhetoric about Proposition F from proponents and opponents alike. The opponents of Prop F have spent $8 million dollars trying to convince you to vote no. The other side has far less money (around $250k) raised mostly by housing activists and the hotel labor union.  So the ‘No on F’ campaign is pasted all over the city and internet.  A lot of the $8 million was spent on scary billboards about how your neighbor is going to sue you if you vote yes, or that you’re going to be taking an adorable elderly couple’s livelihood away from them and force them to leave SF. While I am an attorney and not a political consultant, policy advisor or politician, I can say with some measure of certainty that the majority of these claims are flat out wrong.

This one is outright ridiculous. The fact of the matter is neighbors already have the right to sue each other, legally, for just about anything they want: not mowing their lawns, playing loud music – you could theoretically sue your neighbor because you don’t like the way his cat looks at you. The reason it doesn’t happen all the time is because lawsuits cost money, and aren’t worth bringing unless you, the harmed party, have actual damages worth suing over. What the law does do and which is what AirBnB is scared about, is that it allows individuals to sue AirBnB and the other hosting platforms for failing to comply with the laws. And of course, AirBnB doesn’t want to be sued.

Another big one is the claim that voting in favor of Prop F means that you have to report where you sleep each night to the government. This is a dramatic overstatement. As written the current law, which is intended to ensure hosts register their homes with the city, is unenforceable because neither hosts nor hosting platforms are required to release booking information to the Planning Department. This makes it impossible for the city to determine whether a host is paying the required taxes on bookings, the same way any hotel or business would, or if they’re renting out all or part of a unit. Prop F would require hosts – that is people who want to make money off renting out all or part of their unit – to file a quarterly report that includes records for bookings, and thus information about the number of nights they rent out all or part of their unit. This isn’t the Gestapo here, it’s you making an active choice to rent out your unit, and then providing the information necessary to ensure you aren’t violating the law.

Prop F still allows SF residents to rent out a room or entire home for up to 75 nights annually, or nearly 20% of the year. So it wouldn’t take away hosts’ revenue streams all together. But the more important – and what should perhaps the be more obvious – fact here is that Air BnB is not, nor has it ever been, the only way to close a gap in your rent payments. You know what’s a great way use up that spare room and make your rent? Find a full-time roommate. You can give an actual San Franciscan a home and still make ends meet.

True, you can often make a lot more money renting out a spare room on AirBnB than you can renting it to someone full time. But if you don’t own your home, and are actually renting it from someone else yourself, renting all or part of your home out for your own profit is and always has been illegal and is a good way to get yourself evicted. Most leases prohibit short-term rentals, so if you’re a tenant and are listing your unit on AirBnB, your landlord may have just cause to evict you. And even if you’re getting away with it with your landlord, the existing laws on short-term rentals already prohibit tenants from renting spare space at a profit – i.e., you can’t rent out half of your $2,000-a-month apartment for 30 nights each month at $100 a night. The best you can do is charge the equivalent of a “one day” portion of your own rent for the percentage of the space you’re using to host. Thus Prop F isn’t taking away your cash machine, it never existed legally in the first place.

The law passed last year required hosts on Air BnB and other platforms to register their units with the city and pay taxes on their short-term rentals, the same way a hotel would. Unfortunately the agency appointed to enforce this law doesn’t have the manpower, resources, or even information such a massive undertaking requires. The problem is not that we haven’t given the agency time to figure out whether or not it can handle this monster issue; the problem is that it’s already become clear – by their own admission – that the laws are unenforceable. AirBnB doesn’t want the laws enforced.
>What Prop F does at the most basic level, is create a means to enforce the laws that already exist, and serve to minimize the impact that short term rentals are having on displacement and our already limited housing stock. Prop F would: prohibit unregistered rentals from being listed on AirBnB and other hosting platforms; require hosting platforms such as AirBnB to ensure units listed on their platforms are registered with the city; imposes monetary penalties and the right for individuals to use the law to sue hosting platforms for failure to comply – giving AirBnB actual skin in the game. It also creates a more defined process for the investigation of filed complaints, and the data the city needs to enforce the law.

The law passed by the Board of Supervisors last year has been a complete disaster. Only 600 of the estimated 10,000 short-term rentals have registered with the Planning Department as required. That means 94% of hosts are violating the law. Because the vast majority of listings aren’t registered with the city that means those sweet sweet tax dollars that AirBnB promised the city it would be pulling in, aren’t being paid. Of those 10,000 listings, approximately 70% are non-hosted. Since the new law created no additional budget for enforcement people are filing complaints with the city but the City has no way to investigate the validity, nor the man power to investigate. In the meantime, our city is in the midst of a housing crisis. Each unit that is rented full time on AirBnB is one less unit available to would-be tenants. Since the law isn’t being enforced, landlords have every reason to clear out units so they can rent them instead to short- term rentals on a nightly basis.

Prop F may not be perfect, but it is a compromise. AirBnB pushed hard to legalize short-term rentals and they got their wish last year. Now a $24 billion dollar company wants you to agree with them that the laws they wanted shouldn’t actually be enforced.

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